Bank schemes for Nano

Just as the Tata Nano promises value for money with its low pricing, so do the various schemes of banks which are the preferred lenders for the car. As the schemes are almost uniform in their charges and interest rates, quick and efficient service is perhaps what can help a bank score over its competitors.

The Nano loan schemes are led by public sector banks, with the big daddy, State Bank of India along with its associate banks setting the trend in terms of interest rates and down payment. Other PSU lenders include Central Bank of India, Union Bank of India, Indian Bank, Corporation Bank and Punjab National Bank. The private sector players include ICICI Bank and Kerala-based Federal Bank.

For SBI, a potential Nano customer is an employed professional drawing Rs 75,000 a year or a self-employed person making Rs 1 lakh a year.

SBI is offering a Nano booking loan product with a one-time upfront booking fee of Rs 2,999 for the base model (which has an ex-showroom price of Rs 1.2 lakh in Delhi), Rs 3,499 for the intermediate model (Rs 1.40 lakh) and Rs 3,999 (Rs 1.70 lakh) for the high-end model.

The eligibility criterion has been relaxed keeping in mind that the Tata Nano is designed to meet the demands of low-income customers, an SBI official said.

In case the customer is allotted a Nano, then the booking loan can be converted to a SBI Nano car loan. The loan would be provided up to a maximum of seven years at 11.75-12 per cent interest. The margin requirement for the loans would be 15 per cent. That is, for Rs 1 lakh loan, the customer would have to pay Rs 15,000 upfront to get the bank to give a loan for Rs 85,000.

In case of Union Bank of India, for the booking amount, the minimum down payment for the base model is Rs 2,950, for the second version it is Rs 3,459 and for the higher end version it is Rs 3,952.

If a customer wants to avail himself of a car loan for the Nano, the bank’s auto loans rate is 11 per cent for three years and 11.25 per cent for three to five years.

An official from the bank said, “We expect very good response from rural and semi-urban areas.”

Corporation Bank is also charging Rs 2,999 as down payment for the booking amount of the base model, Rs 3,744 for the second version and Rs 4,231 for the third version. The bank is offering 11 per cent in case the customer goes in for a car loan once he or she gets allotment.

At these rates, the monthly repayment works out to Rs 3,274 per lakh for a three-year loan, Rs 2,187 on a five-year loan and Rs 1,739 for a seven-year loan, said an official from the bank.

ICICI Bank is hoping to capitalise on its online booking facility through both the bank’s Web site and ICICI Direct.com, said Mr N.R. Narayanan, General Manager, retail loans, “We are very bullish about the Nano booking online as it offers huge convenience to our customers. ICICI Direct also has a lot of customers who log on for share trading,” he said. The bank offers car loans at 13.5 per cent for three to five years.

[SOURCE]

Related Posts

• Tatas, RIL, Infosys among world’s 50 most innovative cos (0)
• Forget Nano, Chinese car maker eyes Bengal (0)
• Tata faces new challenges (0)
• Tatas seal Jaguar, Land Rover deal (0)
• Telecom players may soon ape Tata-Virgin model (0)

Bankers feel that a PLR hike might not be necessary immediately but they are assessing the situation and can’t rule it out. If RBI makes another move in July, it’s a certainty that the EMI’s will go up.

“Liquidity situation is comfortable right now. We are assessing the situation and will take a call,” said K V Kamath, MD & CEO – ICICI Bank.

The country’s largest bank SBI will announce its decision within 24 hours but certainly not at the cost of upsetting its PLR customers. SBI might try to structure the hike in a way that PLR linked products are not impacted. But the unanimous consensus is a hardening interest rate regime over the next year.

“I’ve maintained that it’s a flat to up as far as interest rates are concerned. I mean they are certainly not going down,” added Naina Lal Kidwai, CEO & MD – HSBC India.

It’s obvious that the hardening rates means more doom for consumer loans. But what does it mean for corporate loans, will investment slow down?

[source]

Related Posts

• RBI raises repo rate by 25 bps to 8 % (0)
• RBI cuts rates to induce Rs 85,000 cr; signals interest cut (0)
• Inflation at 7%; brace up for tough fiscal measures (0)
• Your ATM transactions may cost a lot less soon (0)
• RBI to lend $5 bn for infrastructure (0)

Related Posts

• Bank interest rates to go up? (0)
• RBI cuts rates to induce Rs 85,000 cr; signals interest cut (0)
• Inflation at 7%; brace up for tough fiscal measures (0)
• Your ATM transactions may cost a lot less soon (0)
• RBI to lend $5 bn for infrastructure (0)

In a draft paper on pricing and access to ATMs, RBI said that current charges for cash withdrawals from third-party ATMs should be capped at Rs 20 per transaction, from March 31, 2008. It has also mandated a freeze on existing charges that are lower.

The bold proposal has produced sharp reactions even before details could be worked out. Banks that are paying lakhs of rupees as rent every month for ATMs in prime locations are worried about their investments. But smaller banks who are yet to build their own networks are very happy with the proposal. The industry association has also expressed its concerns.

“It is not being fair to the bigger banks which have larger networks, and will come in the way of innovation. Smaller banks will want to piggyback on their networks, and it doesn’t make perfect business sense.” said K Unnikrishnan, deputy chief executive, Indian Banks’ Association. He added that there is a considerable cost of cash-replenishment and security for the bank maintaining ATMs.

MORE…

Related Posts

• RBI cuts rates to induce Rs 85,000 cr; signals interest cut (0)
• Bank interest rates to go up? (0)
• RBI raises repo rate by 25 bps to 8 % (0)
• Inflation at 7%; brace up for tough fiscal measures (0)
• RBI to lend $5 bn for infrastructure (0)